The dollar-yen has been able to recover a sizable portion of yesterday’s ensanguine price action, following the dollar’s rejection from key technical resistance. Support for USDJPY remains clear with the Federal Reserve’s promise to hike rates, supposedly, sometime this year.

With the Fed keeping traders guessing, the dollar remains in an upward trend as the potential for monetary tightening stokes demand.

There also is the utter commodity smack down that is flashing signals of globalized deflation. Although, this underlying macro theme has been present for a while now. Gold is undergoing the largest rout is nearly 20 years, and West Texas Intermediate (WTI) crude fell back below $50 per barrel.

The 4H chart for USDJPY shows strong follow through after breaking through a descending wedge (shown by the major descending resistance trend line and descending support).

However, price action is beginning to chop as the pair snags 124 yen per dollar once again. The intraday chart suggests that dollar-yen will likely grind higher through the ascending channel .

Nevertheless, traders should be weary. The ADX , or trend strength indicator, is showing that the current trend strength is easing a bit. If USDJPY fails to close above 124.14, the pair could retest price support at 123.75; and this would also cause a retest of channel support just slightly lower.

A close above near-term resistance, USDJPY would have upside resistance targets of 124.50 and 124.70. If the pair broke down, ultimately closing below channel support, support will be sought at 123.47 (coincides with the 72 EMA ) and 123.18.

Note: The one thing that can upend the dollar is ongoing softness in U.S. economic data that will derail the presumption of a Fed funds rate hike. The geopolitical and global macro climate will likely make yen attractive longer-term, loosing over 60 percent against the dollar since 2012.

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Original Post: https://teachingcurrencytrading.com/home/in/2015/07/chart-of-the-day-usdjpy-72215/